Hepatitis C virus (HCV) infection causes liver fibrosis, cirrhosis, and hepatocellular carcinoma, leading to >350,000 deaths annually globally, and is the most common etiology leading to liver transplantation in the U.S. An estimated 174,000 veterans have HCV infection, and the VA is the largest provider of HCV care. Although there are new and exciting HCV treatments, due to resistance and access issues, therapy is not likely to eradicate HCV infection completely. Thus, a vaccine is needed. In addition, people with HCV infection may continue to develop hepatocellular carcinoma. In persistent HCV infection, proliferation and activation of virus-specific T cells is delayed and inefficient, and immune responses to HBV vaccination and bacterial and schistosomal infections are repressed. This suggests that HCV infection suppresses T cell function, although the mechanism for this is unknown. Recent data showed that HCV RNA is released from hepatocytes in infectious exosomes that can transfer HCV RNA to T cells. Since HCV does not replicate in T cells, it is unclear why viral RNA is transferred to these cells. We found that HCV genomic RNA is processed into a viral short RNA sequence (vsRNA) that reduces expression of protein tyrosine phosphatase type E (PTPRE). PTPRE knockdown inhibits phosphorylation and activation of the lymphocyte-specific Src kinase (LCK). Mutating the HCV vsRNA sequence restored LCK phosphorylation and subsequent TCR stimulation. Targeting HCV RNA to a different T cell receptor (CXCR4) restored TCR signaling and PTPRE protein expression, but reduced expression of CXCR4. Thus, HCV appears to exploit the cellular microRNA machinery to process its genome into vsRNAs that reduce PTPRE expression and inhibit TCR-mediated signaling. Based on our recent studies, we hypothesize that, in lymphocytes and hepatocytes, HCV vsRNAs target expression of multiple genes that influence T cell function and viral replication, and thus offer new insights into immune evasion, potential targets for antiviral therapies, and (since they block T-cell responsiveness) better vaccine strategies. Since major knowledge gaps remain concerning HCV vsRNAs we explore key questions in three specific aims. First, we will characterize HCV RNA structures that target PTPRE and examine cellular factors that mediate vsRNA biogenesis. We hypothesize that HCV vsRNA uses non-canonical miRNA mechanisms to generate the vsRNA. Secondly, we will characterize the mechanism(s) by which HCV vsRNAs are delivered to T cells, potentially identifying novel therapeutic targets. We hypothesize that transfer may involve exosomes released into plasma by infected hepatocytes. Finally, we will demonstrate the relevance of the HCV vsRNA we previously identified in human HCV infection. Our preliminary data show that PTPRE and TCR signaling are reduced during HCV infection, and restored following curative therapy. The level of PTPRE reduction correlated directly with the HCV vsRNA sequence. The higher the percent complementarity with the PTPRE 3'UTR present in the patient's isolate, the greater the reduction in PTPRE expression. In the proposal we should show that HCV vs-RNA regulates T cell and likely hepatocyte function in vivo. This information will be critical for understanding the pathogenesis of HCV and highlight a novel mechanism that could be targeted for the treatment and prevention of this global viral pathogen, and potentially numerous other pathogens.